Bar News - March 18, 2011
Elder, Estate Planning and Probate Law:
Understanding Multi-State Estate Planning: New Hampshire, Massachusetts, and Florida
By: David M. Beliveau
|David M. Beliveau
As an estate-planning attorney, it is not uncommon for me to have clients who own properties in multiple states. Whether itís a cottage on the cape or a snowbird getaway in Florida, understanding the similarities and differences of law in the states most commonly encountered by New Hampshire attorneys is essential to competently managing these types of matters.
All three states have common estate-planning documents, including last wills and testaments, revocable trusts, financial durable powers of attorney, and health care directives.
New Hampshire law and Florida law both provide for living wills; a living will is a directive given by an individual to a doctor in case the individual should end up in a vegetative state and is being kept alive by a machine. Massachusetts law does not have a living will statute. Massachusetts will honor the health care agentís end-of-life decisions instead. Typically, living wills are executed in Massachusetts not for the legal benefits, but for the peace of mind it provides the health-care agent when he/she must make difficult decisions.
Last Wills & Testaments
In all three states, last wills and testaments require the signatures of two disinterested witnesses to be valid. It is important to note that in Florida, all estate- planning documents (including real estate deeds) require two witnesses to be valid.
Uniform Probate Code
Upon the death of an individual, all property the decedent owned under his or her own name must go through the lengthy and expensive probate process in order to transfer property to the heirs. The Uniform Probate Code (UPC) was established to try to help provide uniformity in probate practice among the states. Massachusetts somewhat recently enacted the UPC, but with a delayed effective date of the law as it relates to probate (the guardianship provisions are already in effect). Florida enacted the UPC. New Hampshire has not yet enacted the UPC. Should a decedent own property in multiple states, a probate must be opened in the domiciliary state and ancillary probates opened in the remaining states.
Many clients establish trusts for probate avoidance purposes. Upon the death of the donor, the trustees of such trusts are free to administer the trust property pursuant to the terms of the trusts without supervision by the probate court.
Attorneys need to be aware of the different requirements in the registry of deeds should they help their clients transfer their real estate to their trusts. In New Hampshire, no trustee certificate is required for real estate transfers to trusts. However, state real estate transfer forms need to be prepared and filed. In Massachusetts, a trustee certificate is required for real estate transfers to trusts. No state forms are required. In Florida, as long as the real estate deed contains specific language, no trustee certificate is required for real estate transfers to trusts. No state forms are required.
Typically, transferring out of state real estate to a revocable trust is fairly straight forward, but transferring homestead real estate to a revocable trust is more complicated. For property outside of a trust, all three states provide homestead protection for their citizens for their residences. The homestead laws protect a certain amount of equity in the residence from being able to be attached and executed upon by creditors. In New Hampshire, homestead protection arises automatically to its citizens. In Massachusetts, it has been the law that a homestead declaration has to be prepared and recorded. However, Massachusetts recently enacted a new homestead law that is scheduled to become effective in the middle of March 2011, which provides that a minimum amount of homestead protection will arise automatically to its citizens. In Florida, homestead protection arises automatically to its citizens who register and provide the respective proof to the state as residents.
When transferring homestead property into a revocable trust, you should be aware that in New Hampshire, to preserve the homestead protection, the trust title must include the word "revocable." In Massachusetts, it has primarily been the law that transfers of residences to revocable trusts of registered land have not been afforded homestead protection and such transfers of recorded land have been unknown as to the status of homestead protection. However, the new homestead law provides homestead protection to past, present, and future transfers of residences to revocable trusts of both registered and recorded land.
In Florida, homestead has multiple implications, including title, tax, and asset protection. Surviving spouses and minor children have title homestead rights. In the absence of either a nuptial agreement or a spousal waiver, a surviving spouse must receive title to the residence. In the case of a minor child, the minor child through his or her guardian must receive title to the residence. Any contrary purported transfer of the residence is void.
In addition, in Florida, a transfer of a residence to a joint revocable trust for a married couple with no minor children that can be revoked by either spouse does not present a title problem. However, in such a case where there are minor children, upon the surviving spouseís death, there would be a title problem. Also, in the absence of either a nuptial agreement or a spousal waiver, in the case of a transfer of part of all of a residence to a spouseís own revocable trust containing estate tax provisions, upon such spouseís death, there would be a title problem.
In Florida, in the case of a transfer of a residence to a revocable trust, paperwork needs to be prepared and filed with the state to preserve the tax homestead protection. Such tax homestead protection prevents the state from increasing real estate taxes on a residence more than a certain percentage annually. It is unclear whether asset protection homestead is forfeited with a transfer of a residence to a revocable trust.
Married couples may establish separate revocable trusts for each spouse if state and, if applicable, federal estate taxes are applicable. New Hampshire does not yet have its own estate tax, although legislation has been proposed to establish one. If enacted, the New Hampshire estate tax exemption amount will be $2 million. Massachusetts has its own estate tax. The Massachusetts estate tax exemption amount is $1 million. Florida does not have its own estate tax. The Florida Constitution prevents its legislature on its own from enacting an estate tax. There is a federal estate tax. The federal estate tax exemption amount for the next two years is $5 million.
Getting Help Out-of-State
To help to ensure that estate planning and probate work is completed correctly and to avoid legal malpractice, it is best for local counsel to engage out of state counsel to prepare and process any out of state estate planning and probate documents (for example, real estate deeds for real estate transfers to trusts). Florida has made it a felony to practice law if counsel is not licensed there. Also, Florida considers the preparation of the deed as the practice of law.
David M. Beliveau is the managing attorney at the Beliveau Law Group, which has offices in New Hampshire, Massachusetts and Florida, and is admitted to practice in all three states.